Why Won't Americans Save?

October 24, 1991

The editorial "Americans and Saving," Oct. 4, fails to recognize the primary reason behind the decline in the US savings rate. Over the last 30 years, the policy of government has been to provide for the people in time of need. This provision has taken form through welfare, Social Security, and unemployment benefit programs, to name a few. Two detrimental effects to society are related to this policy.First, these government programs cost money. Productive members of society pay an increasingly large share of their income as taxes to finance these programs, leaving less money for savings. Second, a whole generation of Americans has come to expect the government to provide for them in time of need. Accordingly many Americans, especially young ones, when employed tend to spend all their income on material goods, rather than save. They have learned that there is no need to save for the proverbial rainy day. Money will always be there from the government. The way to reverse the savings decline, as well as to improve the economic well-being of the nation, is to decrease the tax burden on society with a corresponding decrease in government social spending. The benefits would be immediate. People would have more money available for savings, and they would save due to the knowledge that the government will no longer serve as their rainy-day fund. Peter D. Konetchy, Byron, Mich.

The editorial misses two major disincentives for savings. First, as interest rates decline for borrowing, so do interest rates on savings. A lower return on savings encourages Americans either to buy now, as the government is urging them to do to help stimulate the economy, or to pay off debt for which interest rates are not declining. Second, the current income tax on interest income exceeding a low limit discourages anyone from saving large amounts. A higher allowance would greatly increase savings, creating funding for loans and investments and consequent employment to replace the taxes lost. Ernie Karsten, Berkeley, Calif.

US responsibility in El Salvador It seems to me that there is something missing from the opinion-page article "Partial Justice in Salvador," Oct. 8. The US government should share the blame for the murders of the six Jesuits, their housekeeper, and her daughter. In 1980, the Council for Inter-American Security produced a policy paper that defined the Reagan administration's agenda in Central America and beyond. This "Santa Fe Document" said that "US foreign policy must begin to counter liberation theology." Furthermore, our government has given more than $4 billion in military aid to the Salvadoran government in the past 11 years, knowing that that government's death squads target clergy, teachers, and union leaders - the people who try to empower the poor. The $4 billion we have given came out of American taxpayers' pockets, and it is not an investment with any return. It has produced nothing of value for us and plenty of misery for Salvadorans. Whether or not Americans had any foreknowledge or complicity in this tragedy, our government is at least guilty of setting the climate in which such things could happen and funding the forces of terror. This alone is unconscionable. Gerry Moore, Ehrenberg, Ariz.

Finding peace Regarding the article "Maine's Organic Fair Provides All-Natural Fun," Oct. 4: What a refreshing piece! Were all states to follow Maine's precedent, we would surely be headed in the right direction: finding peace, harmony, order, and coordination among all living things. The progress report of people working together since the World Summit for Children, "Children Wait on World's Promises," in the same issue, is also heartening. The "Keeping the Promise" campaign will bring about the intended results that are necessary for the well-being of our children only as we are aware of the efforts that are being made on their behalf and support them. Carol Young, Omaha, Neb.